Engine Division
Engine Division provides engines for Tractor Division of a company. The standard unit costs for Engine Division are as follows: $$\begin{array} { l l }
\text { Direct materials } & \$ 700 \
\text { Direct labour } & 1,300 \
\text { Variable overhead } & 400 \
\text { Fixed overhead } & 250 \
\text { Market price per unit } & 2,730
\end{array}$$
-What is the transfer price that is based on full cost plus a markup of 35%?
A) $585.00
B) $2,730.50
C) $2,760.00
D) $3,577.50

Question

Engine Division
Engine Division provides engines for Tractor Division of a company. The standard unit costs for Engine Division are as follows: $$\begin{array} { l l } 
\text { Direct materials } & \$ 700 \
\text { Direct labour } & 1,300 \
\text { Variable overhead } & 400 \
\text { Fixed overhead } & 250 \
\text { Market price per unit } & 2,730
\end{array}$$
-What is the transfer price that is based on full cost plus a markup of 35%?
A) $585.00
B) $2,730.50
C) $2,760.00
D) $3,577.50

Quizplus · Accepted Answer

The full cost is the sum of direct materials, direct labour, variable overhead, and fixed overhead: $700 + $1,300 + $400 + $250 = $2,650. The transfer price with a 35% markup is $2,650 * 1.35 = $3,577.50.

Engine Division Engine Division Provides Engines for Tractor Division of a Company

Engine Division
Engine Division Provides Engines for Tractor Division of a Company